People who are willing to invest in a business are generally upbeat, optimistic and excited by new possibilities. All this positivity can make one a little reckless. It is important to remain level headed when looking at the potential that a new rental investment property promises.
Bad things happen in all walks of life even in real estate. So you need to protect yourself from worse case scenarios.
To lessen your risk:
Do your homework. Make sure the numbers for cost, maintenance and rental income favor the profit side of the equation. Make sure you are property is in a location that rents well. And finally make sure the laws for your area don’t have rent control stipulations or unforeseen tax liabilities.
Screen your tenants. You want tenants who are going to be able to pay and pay on time. Taking extra time up front can save you lost rental income down the road.
Get a home inspection. Make sure there are no expensive repairs needed that you are unaware of.
Get proper insurance. You need to know if the house burns down your insurance will cover that. Also make sure there are no loop holes in your insurance where your tenant can sue you for injury while living in the property. You also need to make sure that you personally are not liable for any type of lawsuit that would arise from the property. Find a good honest insurance agent that has experience in the rental market.
Use proper lease language. Contracts are all about the details. Make sure yours is ironclad in order to protect yourself. Pay attention to obligations, liabilities, and price and lease length so there is no misunderstanding.
It is fun to get excited about a new money making opportunity but don’t get carried away. Slow down take time to prepare for the worst and you will be well on your way to profits.
Learned how to plan for the best, hope for the worst, and set myself up for success: #Ironclad
- 1Investments can be profitable but be prepared for unforeseen circumstances and have steps in place to deal with every scenario.
- 2Don’t slack on getting professional opinions and know when to walk away from a deal.
- 3Insurance and well thought out leases are very important and can protect yourself and your tenant.
See the original at: https://www.fortunebuilders.com/plan-worst-hope/